Experts expect that the United States will go bankrupt on June 1, and this event could potentially have a slight impact on the cryptocurrency industry.
Banks in the United States have collapsed one after the other. The most recent bankruptcy of First Republic Bank marks the way for a disaster to begin for the U.S. financial system.
As the U.S. continues to deal with the collapse of its banks, The Wall Street Journal has published a report regarding the situation. According to the report, the financial “crisis” may deteriorate fast during May.
Janet Yellen – the Secretary of the Treasury, has stated that if Congress does not raise the debt limit, the U.S. might default on the payment of its public debt by June 1.
It is the first time ever that the United States has faced raising in its public debt with the default on payments. President Joe Biden together with the members of Congress, will meet to discuss the matter.
The coffers of the U.S. would be in a bad state if there is a default in public payments. The only way to resolve this situation would require taking out new loans.
This is a circumstance that modern countries are used to, yet it has the potential to be deadly. Particularly now that the U.S. dollar is more threatened than ever.
This situation is added to a list of many other concerns foreign countries have regarding the country. So, it is making them leave for other alternatives for trade settlements.
Until now, the United States government has not proposed a solution to the problem, but it will be debated next week. However, WSJ thinks they will not be able to come to an agreement any time soon.
What Will Happen with Cryptocurrencies if the United States Go Bankrupt?
If the U.S. goes bankrupt, cryptocurrencies will benefit. Mostly because coins like Bitcoin (BTC) that are pegged to the value of gold will look like the safest and best option for Americans. They will most likely invest in cryptocurrencies to protect their money and assets.
Hence, crypto might become an alternative option. If something like this were to happen, countries with Bitcoin holdings, such as El Salvador or Bulgaria, might become the richest. Nevertheless, goods such as gold will remain a solid competition for the cryptocurrency industry.
The Federal Reserve (Fed) will soon offer its opinion for the time being. The result might affect the price of Bitcoin. Industry experts predict a 25 bps increase in interest rates.
In other words, the U.S. economy is indeed collapsing, but Bitcoin continues to thrive.